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February 20, 2007

Supreme Court Overturns Punitive Damages Award Against Philip Morris

The Supreme Court, in a 5-4 decision announced today, overturned an Oregon jury's $79.5 million punitive damages award against Philip Morris.  At trial, the jury found Philip Morris had engaged in deceit, misleading the plaintiff whose death was caused by heavy smoking.  It awarded compensatory damages of about $821,000 and punitive damages in the amount of $79.5 million.  The Oregon Supreme Court had earlier rejected Philip Morris' argument that the Constitution prohibits the state, acting through a civil jury, from using punitive damages to punish a defendant for harm to nonparties.  Justice Breyer's opinion for the majority concluded, however, that Philip Morris' due process rights were violated precisley because the state jury had not been properly instructed that it could not punish the defendant for harming nonparties. 

The court's opinion also makes clear, however, that a jury is free to consider evidence of harm to nonparties in order to help determine the degree of reprehensibility of the defendant's conduct, so long as that evidence is not used as the basis for punishing the defendant directly for harm to nonparties.  This distinction will presumably have to be carefully drawn in jury instructions so that there is no misunderstanding or confusion that might deprive the jury of the "proper legal guidance" required by due process.

This much-watched case was argued in October of 2006.  Today's ruling comes four years after the court's last major opinion in State Farm v. Campbell regarding the constitutional due process limitations on the awarding of punitive damages.  State Farm focused on the question of the ratio between compensatory and punitive damages awards as a mechanism to avoid unconstitutionally excessive punitive awards.  That issue, though raised and argued in this most recent case, was not addressed by the court.

The case is Philip Morris v. Williams, 2007 WL 505781.  See The Associated Press story.

JDP

February 20, 2007 | Permalink

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